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I think this is because inflation in the US has two tiers. There's the big "essential" stuff- housing, healthcare, education- which have skyrocketed in price a

I think this is because inflation in the US has two tiers. There's the big "essential" stuff- housing, healthcare, education- which have skyrocketed in price and nowadays take a higher percentage of people's salaries. Then there's groceries, consumer goods, electronics, restaurants, which have gone up much slower. So in a way, that $12/hour was good in terms of the amount of non home cooked food you could get (or live music tickets or whatever other things you considered luxuries at the time).

steveBK123 4y ago
The tiers are not essential vs non-essential. The tiers are relative to the labor component. Goods & services that have gotten more efficient over time as we've introduced technology, automation, (what we do on this site) or been offshored.. have gone up slower than inflation. Everything that has a fixed, domestic labor component has gone up faster than inflation. There's really no other magic trick to it. Food is a great example. Something like 40% of the country lived & worked on farms in 1900. That number is now about 1%. That means 40% of the entire countries labor was required to feed 100%, and now it only requires 1%. So a 2.5:1 to a 100:1 ratio change of food labor consumers to providers. Other areas like education & healthcare, the lack of efficiency is often a selling point. Look at colleges that advertise student:faculty ratios or K-12 districts that talk about classroom sizes. In my experience we've probably actually gotten less efficient as everyones gotten much more precious about the education their kids receive.
- zbrozek 4y ago
  Housing might be neither. There we have artificially constrained supply, driving up prices and price volatility.
  - steveBK123 4y ago
    How would you drive down cost in housing? Automate building prefabricated homes of a simple common designs. Use smaller lots of land. Build smaller units. Build higher to put more units on the same land. Build multi-family/apartment style to reduce single family home costs (siding/roofing/boiler/yard/etc). Basically all the things government tends to ban and populace tends to frown upon. Most stats have shown we haven't really made much labor efficiencies on housing construction. No one wants to live in a prefabricated / factory built home, which is what would drive down the labor costs dramatically. That said I'm kind of a weirdo and like to browse the container home websites frequently, lol. Further, modern homes are bigger (and nicer) than our parents or their parents generation lived in. Couple that with the land component being basically inflationary due to natural scarcity PLUS government zoning rules restricting lot sizes to be artificially high, banning multi-family construction, etc. You have a lot (basically all) tipping the needle towards higher cost.
    - frosted-flakes 4y ago
      You drive down housing costs by building more housing, full stop. Housing is expensive because the supply is extremely limited, and the supply is limited because it's too hard to actually build housing, because governments and NIMBYs seemingly don't want more housing.
      - steveBK123 4y ago
        Yes I think we agree here.
      - noduerme 4y ago
        There is tons of cheap, prefab housing available, they're called trailer parks. They're everywhere except where you want to be. The anti-NIMBY argument basically boils down to "If I can't have that house, no one should have it. Let's invoke the unfairness of life and have it torn down, or else build a vertical trailer park next to it."
        steveBK123 4y ago
        I think the NIMBY argument is - no you can’t build stuff on your land because I don’t like it. See it works both ways. YIMBY argument is largely that government and neighbors shouldn’t have such a front ability to restrict development.
        frosted-flakes 4y ago
        The YIMBY crowd basically boils down to "do whatever you want, I don't care, just don't stop me doing what I want". More basically, "government regulation bad, capitalism good". which happens to be one of the Republican party's main platform points (in theory, but only when it suits their own goals). The YIMBY crowd doesn't want to tear down your house, it wants to let YOU tear down your house and build something more profitable in its place.
        noduerme 4y ago
        Activists recently prevailed on my city's government to rewrite the zoning ordinance, making my block of single family homes eligible to be torn down and turned into 4-plexes. I personally don't have a huge problem with it - from a libertarian point of view - because in theory, that means exactly what you said. I can sell my property for more money or develop it and make more from it. The aspect of it that irritates me is that those weren't the conditions under which I bought the house, and the reasoning behind the change was a foolish sop toward social justice, and clearly comes from a place of sheer hatred born of jealousy toward anyone living in a single family dwelling. I wouldn't have bought the house to live in if I'd known that ten years later it would be surrounded by apartment buildings. And so that plus the castigation of people trying to maintain their space as "NIMBY" leaves me mainly with the attitude that they can have it, I'll take the profit and move somewhere they can't afford and have less leverage to screw up. Again, trailer parks have been a thing for 70 years now. The innovation here has been rewriting zoning rules without actually rezoning, to bring the trailer park to people who can afford to live somewhere better. The funny thing about class warfare, though, is that people take their lack of class with them and end up making slums wherever they go, and other people manage to make a buck and stay ahead of them.
- wardedVibe 4y ago
  This is called the baumol effect. It's certainly part of the picture.
- lozenge 4y ago
  Restaurants have gotten more efficient over time? I don't think so. Not enough to explain why their price is so different from education or housing. Class sizes haven't gone down in colleges, admin costs have gone up though. What's common between them is they're essential services and the government increases their affordability. Student loans, mortgage interest deduction, tax breaks on healthcare spending (HSA, etc).
  - dreamcompiler 4y ago
    Yes, restaurants have gotten more efficient. When was the last time you went to a restaurant where you sat down and then someone walked over and took your order? Okay it still happens but until the 1990s it was pretty much all restaurants except fast food chains. Now, it seems like most new restaurants use the "customer orders at the counter" model to save money on wait staff.
    - steveBK123 4y ago
      My original point was more on the farming end of things, but yes I'd argue there's clearly been efficiencies in restaurant service. First, like it or not, chains are a form of efficiency in terms of management/procurement/logistics overhead. Certainly more fast casual formats than before that reduce the need for front of house staff. And as always with labor shocks, efficiencies get found. With the recent pandemic shock of restaurant shut downs & slow reopening... a lot of restaurants are back to full pre-pandemic high tables served (or more, in places like NYC where seating has expanded to large outdoors spaces never occupied 2019 or before), but never hired back their full staff.
- landemva 4y ago
  > The tiers are relative to the labor component. Im my experience, it seems more like the tiers are relative to the regulatory or barriers to entry. Starting a hospital or college or building a home has regulatory barriers. And those prices have climbed dramatically the past two decades.

steveBK123 4y ago

The tiers are not essential vs non-essential. The tiers are relative to the labor component. Goods & services that have gotten more efficient over time as we've introduced technology, automation, (what we do on this site) or been offshored.. have gone up slower than inflation. Everything that has a fixed, domestic labor component has gone up faster than inflation. There's really no other magic trick to it. Food is a great example. Something like 40% of the country lived & worked on farms in 1900. That number is now about 1%. That means 40% of the entire countries labor was required to feed 100%, and now it only requires 1%. So a 2.5:1 to a 100:1 ratio change of food labor consumers to providers. Other areas like education & healthcare, the lack of efficiency is often a selling point. Look at colleges that advertise student:faculty ratios or K-12 districts that talk about classroom sizes. In my experience we've probably actually gotten less efficient as everyones gotten much more precious about the education their kids receive.

zbrozek 4y ago
Housing might be neither. There we have artificially constrained supply, driving up prices and price volatility.
- steveBK123 4y ago
  How would you drive down cost in housing? Automate building prefabricated homes of a simple common designs. Use smaller lots of land. Build smaller units. Build higher to put more units on the same land. Build multi-family/apartment style to reduce single family home costs (siding/roofing/boiler/yard/etc). Basically all the things government tends to ban and populace tends to frown upon. Most stats have shown we haven't really made much labor efficiencies on housing construction. No one wants to live in a prefabricated / factory built home, which is what would drive down the labor costs dramatically. That said I'm kind of a weirdo and like to browse the container home websites frequently, lol. Further, modern homes are bigger (and nicer) than our parents or their parents generation lived in. Couple that with the land component being basically inflationary due to natural scarcity PLUS government zoning rules restricting lot sizes to be artificially high, banning multi-family construction, etc. You have a lot (basically all) tipping the needle towards higher cost.
  - frosted-flakes 4y ago
    You drive down housing costs by building more housing, full stop. Housing is expensive because the supply is extremely limited, and the supply is limited because it's too hard to actually build housing, because governments and NIMBYs seemingly don't want more housing.
    - steveBK123 4y ago
      Yes I think we agree here.
    - noduerme 4y ago
      There is tons of cheap, prefab housing available, they're called trailer parks. They're everywhere except where you want to be. The anti-NIMBY argument basically boils down to "If I can't have that house, no one should have it. Let's invoke the unfairness of life and have it torn down, or else build a vertical trailer park next to it."
      - steveBK123 4y ago
        I think the NIMBY argument is - no you can’t build stuff on your land because I don’t like it. See it works both ways. YIMBY argument is largely that government and neighbors shouldn’t have such a front ability to restrict development.
      - frosted-flakes 4y ago
        The YIMBY crowd basically boils down to "do whatever you want, I don't care, just don't stop me doing what I want". More basically, "government regulation bad, capitalism good". which happens to be one of the Republican party's main platform points (in theory, but only when it suits their own goals). The YIMBY crowd doesn't want to tear down your house, it wants to let YOU tear down your house and build something more profitable in its place.
        noduerme 4y ago
        Activists recently prevailed on my city's government to rewrite the zoning ordinance, making my block of single family homes eligible to be torn down and turned into 4-plexes. I personally don't have a huge problem with it - from a libertarian point of view - because in theory, that means exactly what you said. I can sell my property for more money or develop it and make more from it. The aspect of it that irritates me is that those weren't the conditions under which I bought the house, and the reasoning behind the change was a foolish sop toward social justice, and clearly comes from a place of sheer hatred born of jealousy toward anyone living in a single family dwelling. I wouldn't have bought the house to live in if I'd known that ten years later it would be surrounded by apartment buildings. And so that plus the castigation of people trying to maintain their space as "NIMBY" leaves me mainly with the attitude that they can have it, I'll take the profit and move somewhere they can't afford and have less leverage to screw up. Again, trailer parks have been a thing for 70 years now. The innovation here has been rewriting zoning rules without actually rezoning, to bring the trailer park to people who can afford to live somewhere better. The funny thing about class warfare, though, is that people take their lack of class with them and end up making slums wherever they go, and other people manage to make a buck and stay ahead of them.
wardedVibe 4y ago
This is called the baumol effect. It's certainly part of the picture.
lozenge 4y ago
Restaurants have gotten more efficient over time? I don't think so. Not enough to explain why their price is so different from education or housing. Class sizes haven't gone down in colleges, admin costs have gone up though. What's common between them is they're essential services and the government increases their affordability. Student loans, mortgage interest deduction, tax breaks on healthcare spending (HSA, etc).
- dreamcompiler 4y ago
  Yes, restaurants have gotten more efficient. When was the last time you went to a restaurant where you sat down and then someone walked over and took your order? Okay it still happens but until the 1990s it was pretty much all restaurants except fast food chains. Now, it seems like most new restaurants use the "customer orders at the counter" model to save money on wait staff.
  - steveBK123 4y ago
    My original point was more on the farming end of things, but yes I'd argue there's clearly been efficiencies in restaurant service. First, like it or not, chains are a form of efficiency in terms of management/procurement/logistics overhead. Certainly more fast casual formats than before that reduce the need for front of house staff. And as always with labor shocks, efficiencies get found. With the recent pandemic shock of restaurant shut downs & slow reopening... a lot of restaurants are back to full pre-pandemic high tables served (or more, in places like NYC where seating has expanded to large outdoors spaces never occupied 2019 or before), but never hired back their full staff.
landemva 4y ago
> The tiers are relative to the labor component. Im my experience, it seems more like the tiers are relative to the regulatory or barriers to entry. Starting a hospital or college or building a home has regulatory barriers. And those prices have climbed dramatically the past two decades.